Entelos Buys Iconix to Combine Efficacy and Toxicology Expertise

Initial consideration is valued at $14.1 million, with a potential $25 million earn out dependent on financial milestones achieved.!--h2>

Entelos is taking over Iconix Biosciences for an initial consideration of up to $14.1 million in an all-share transaction. If Iconix achieves certain financial milestones within the first year after the acquisition, a maximum earn out payment of $25 million will be satisfied through Entelos shares.

“We believe the combination of our predictive efficacy models with Iconix’ toxicology expertise can create a new paradigm for discovering and developing drugs,” says James Karis, president and CEO of Entelos. “Drug failures are often due to efficacy or toxicity issues, and while Entelos’ predictive disease models address efficacy, Iconix’ toxicology databases help to address toxicities.

“In addition, Entelos’ recently announced collaboration with the FDA to build a model of drug-induced human liver injury to identify patients at risk for developing hepatotoxicity and the addition of Iconix will expand our capability for drug safety assessment,” Karis continues.

The $14.1 million payment will be adjusted for net working capital and will be satisfied through the issuance of 12,776,658 shares, with a reference price of 55 pence, or about $1.10. Entelos’ closing price the day before the acquisition announcement was 32.5 pence, based on which, the initial consideration for Iconix is valued at up to $8.3 million. Additionally, the number of shares to be issued for the earn out will be calculated using a 10-day average closing price for the prior period.

Iconix will become part of Entelos’ Technology and Services division. Iconix reported $4.9 million in revenues and a loss of $11.2 million with gross assets of $7.6 million at the end of 2006, according to Entelos. The company expects Iconix to be cash-flow neutral on a pro-rata basis going forward and to add about $1 million to 2007 recognized revenues.